A total of six prototypes were eventually built for the U.S. Army under the designation of the XM8 AGS. The M8 was later type-classified by the U.S. Army in late 1995 and initially slated for production in 1996. The M8 project was canceled in 1997 to free up money for other fledgling programs. In March 2004 at the 82nd Airborne Division's request, the Army approved the transfer of four production vehicles from United Defense's facility in York, Pennsylvania to the 82nd at Fort Bragg in North Carolina. However as of June 2004, this transfer was on hold pending an "ongoing analysis."[1] The M8's role in the 2nd ACR was eventually taken by the Stryker.

United Defense had reportedly sought overseas customers, without success. In late 1997 they parted with FNSS Defence Systems to offer the M8 AGS to the Turkish Land Forces Command. As of 2006, Taiwan at one point expressed interest as a replacement for its fleet of M24 Chaffee/M41 Walker Bulldog light tanks but would not commit following cancellation by the U.S.

In late 2013, the U.S. regained interest in the M8 AGS when they began looking to procure a mobile airborne protected firepower platform for forced-entry style missions. During operations in Iraq and Afghanistan, air assault forces like the 82nd Airborne relied on fire support from strike fighters, which risked civilian casualties and was not effective at destroying concealed or covered positions. The plan is to provide the XVIII Airborne Corps with a light tank which can be flown by C-130 cargo planes and airdropped into a combat zone. The vehicle must have a base armor package capable of defending against 14.5 mm ammunition, be able to bolt on additional armor packages after follow-on forces arrive, and be able to drive off road. After a light tank is selected, they will buy some for testing and give them to the XVIII Airborne Corps for trials. The Airborne Corps is to be equipped with a flotilla of vehicles in a distribution plan called 4-14-44: 4 per platoon; 14 per company; 44 per battalion. Unlike the previous Future Combat Systems program, which sought to create light transportable vehicles for the entire service and was cancelled in 2009 from cost overruns and other factors, the mobile protected firepower effort is meant specifically to support the airborne mission with armored capabilities. The M8 was originally planned to replace the M551 Sheridan and take up the role, and Fort Benning officials say it meets the requirements like it did in 1996, described as "old technology that kills T-72 tanks."[2][3] Searching for an MPF is part of an Army effort to develop three lightweight, highly mobile ground vehicles for a light infantry brigade; the other parts include the Ultra Light Combat Vehicle and a light reconnaissance vehicle (LRV). The MPF would target bunkers, armored vehicles, and targets behind walls using modern fire control systems. Its base armor is to protect against shrapnel from 152 mm artillery shells, should be able to add underbelly blast protection in a one-hour conversion to full combat mode, and carry enough fuel and ammunition to operate for 24 hours before being resupplied. An initial capabilities document is scheduled for consideration in October 2014, with the MPF to enter service by 2024.[4]

The basic hull of the M8 is made of welded aluminum alloy, with a unique modular armoring system that allows the vehicle to be equipped according to requirements. The Level I (basic) armor package is designed for the rapid deployment role and can be airdropped from a C-130 Hercules and protects the vehicle against small-arms fire and shell splinters. The Level II armor package can still be carried by C-130, but must be airlanded and is designed for use by light forces in a more serious threat environment, while level III armor is designed for contingency operations and is supposed to provide protection against light handheld anti-tank weapons. Level III armor cannot be carried by C-130. All versions are air-transportable by C-5 Galaxy and C-17 Globemaster III (five and three respectively).

The M8 is armed with the M35 rifled autoloading 105 mm cannon main gun with an M240 7.62 mm machine-gun mounted co-axially. The M35 has a rate of fire of approximately 12 rounds per minute, with a ready capacity of 21 rounds with 9 more in stowage. Power is provided by a Detroit Diesel 6V-92TIA diesel developing 580 hp.

This technology demonstrator was a test bed to bring Future Combat System technologies to the current force in the near term. Advanced technologies incorporated into this variant include hybrid electric propulsion, band track, improved ceramic/composite armor, Second Generation FLIR Night Vision technology, digitization, a XM-291 120 mm main gun along with its 120 mm auto loader. This demonstrated system upgrade retains the M8's C-130 Hercules air transport capability, as well as the AGS 3-man crew.